Private Dental Practice vs. DSO Dominance

Dentistry, Lifestyle

Spoiler alert! This post is ALL about dental talk. You see, for the past several months – since I was notified that the company I work for (for the last seven years of my life mind you) was now under the ownership of a large dental support organization (DSO) – I have been deliberating whether it is time for me to pursue an ownership or partnership arrangement of my own. I have written about this very subject here; however, that was under the (much more ideal) circumstances of being employed by two pediatric dentists and not some massive private equity company that buys up dental offices for investment purposes. While the name of the new owners is irrelevant, their portfolio currently consists of over 250 dental offices across the country and they are continuously growing aggressively.

This business model is not new. In fact, I am sure you have seen many of your local, private-practice physicians selling to private equity companies. As a pediatric dentist that works closely with anesthesiology doctors, I witnessed first-hand when they started to be taken over. Once a large investment firm enters the picture, and really gets its claws into an asset class, you have to believe they are going to streamline the shit out of it in order to drain every last dime of profit out of a business they acquire. In the case of the anesthesiologists I work with; all of a sudden they were forced to work with an expanded lineup of surgeons, taking on more call schedules, learning new systems, performing post-op surveys, and more.

For someone that is close to retiring, some of these DSO offers may not be so bad. I imagine they give a very hefty upfront payout, and after mandating the doctor(s) stay on for ‘x’ amount of years (to ensure minimal attrition occurs), I am sure there is a golden parachute that many people receive on the tail end of the acquisition as well. My bosses both have to stay on four more years, but after which, they can and likely will retire from dentistry forever. Me? on the other hand. As a mere employee, with absolutely no equity stake, I get squat from the buyout and have yet to see how they plan to ‘trim the fat’ (so to speak) within our company. They’re a big company that tries to entice you with a matching 401k plan you can enroll in, some solid health insurance plans you can participate in, and some perks that smaller run organizations may not be able to afford to provide their employees with – but, its the changes in the day to day operations that scare me.

For example, I heard the words ‘production goal’ uttered from my office managers mouth for the first time in seven years last week. She also asked my lead assistant ‘why we ordered so many nitrous oxide tanks’ for our office? Something that has neither changed/increased, nor been scrutinized or questioned, up until this point. The way I see it, they are still in a transitionary period where they do not want to rock the boat (i.e. don’t spook the staff, keep changes to a minimum, etc.) – but certainly, the tides are changing.

While I am grateful that the transition has at least kept me gainfully employed; in the last couple months I have updated my CV, set up a LinkedIn and Indeed profile, arranged lunches with some pediatric dentists around the valley, reached out to dental supply reps and expressed interest in any partnership/ownership opportunities they may be aware of. Out of the five dentists that I reached out to, two recently sold some or all of their practice to a DSO, one is content and is not interested in any arrangement, but two are willing to discuss my coming onboard with some equity stake on the table.

“Success comes from taking the Initiative and following up…Persisting…

What simple action could you take today to produce a new momentum toward Success in your life?

– Tony Robbins

For the last seven years, I have worked for someone else because it has afforded me a comfortable working environment, good pay, a flexible work schedule, and no interference in how I chose to practice clinically. And, I am not a risk-taker. Or, I have been too afraid of failure. Unfortunately, I have come to realize all the time I have worked, was to build up someone else’s brand and valuation.

One of the pediatric dentists I met with recommended a book called “The Millionaire Master Plan” by Roger James Hamilton. He spoke highly of the book, and claimed it would expand my way of thinking and put me quite a few years ahead in terms of wisdom and self-awareness. I am a few chapters in, and so far a good portion of it has been dedicated to helping someone recognize their ‘genius’, their strengths and weaknesses, and talks about expanding on those traits to build your wealth.

For the sake of completeness, I should say that I have also toured a couple of empty, grey-shell office spaces as well. The problem here is that, dental build-outs can be quite costly, plus you have no cash flow for the first several months/years, plus you’re competing against the deep-pocketed DSO’s with their endless marketing dollars and – it really steepens the curve when it comes to opening up a start-up. I also have investigative work to do (with the help of an attorney), to review my existing contract and gauge the enforceability of my non-compete and other restrictive covenant clauses.

My way of thinking is changing. I am now seeking opportunities I would normally be too nervous to pursue. I hope to write again soon to share the results of some of these meetings, and with any luck, announce that I may have new endeavors underway. Thank you for taking the time to read all of this, and sorry to limit it primarily to the dental folk out there. Enjoy your day!

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